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Exhibit 10.6
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT is entered into this 10th day of November,
1998, by and between SERVICO, INC. ("Company") and DAVID BUDDEMEYER
("Buddemeyer").
WHEREAS, Buddemeyer is employed by the Company pursuant to that
certain Employment Agreement dated May 14, 1993 and pursuant to such agreement
serves as President and Chief Operating Officer of the Company; and
WHEREAS, Buddemeyer and the Company desire to terminate Buddemeyer's
employment by the Company and to set forth their agreement with respect to such
termination and certain other matters.
NOW, THEREFORE, in consideration of the agreements and covenants
hereinafter set forth, the parties agree as follows:
1. TERMINATION OF EMPLOYMENT. Effective as of November 13, 1998
(the "Severance Date"), the employment of Buddemeyer by the Company will
terminate and Buddemeyer shall not have any further rights, whether to
employment, compensation or benefits, except as provided in this Agreement.
2. SEVERANCE COMPENSATION.
(a) SEVERANCE PAY. The Company shall pay to Buddemeyer
an aggregate severance pay equal to $1,282,500.00 payable in two (2)
equal installments on or before November 13, 1998 and April 1, 1999,
net of applicable withholding taxes ("Severance Pay").
(b) HEALTH INSURANCE BENEFITS. For a period of one (1)
year after the Severance Date, Buddemeyer shall be entitled to
continue to participate, at the Company's expense, in the Company's
health insurance program. Such benefit will be in full satisfaction of
any rights which Buddemeyer may have to health insurance continuation
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"). Benefits otherwise receivable by Buddemeyer
pursuant to this Subparagraph (b) shall be reduced to the extent
comparable benefits are actually received by Buddemeyer from a
subsequent employer during the period during which the Company is
required to provide such benefits, and Buddemeyer shall report any
such benefits actually received by him to the Company.
(c) OTHER BENEFITS. Provided that there are no adverse
tax consequences, the Company shall continue coverage for Buddemeyer,
on the same terms and conditions as would be applicable if Buddemeyer
were an active employee, under the Company's life insurance, group
disability benefits and similar welfare benefit plans for
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a period of one (1) year. Benefits otherwise receivable by Buddemeyer
pursuant to this Subparagraph (c) shall be reduced to the extent
comparable benefits are actually received by Buddemeyer from a
subsequent employer during the period during which the Company is
required to provide such benefits, and Buddemeyer shall report any
such benefits actually received by him to the Company. In the event
that adverse tax consequences would result from the continuation of
benefits under this Subparagraph (c), the Company may pay to
Buddemeyer an amount equal to the annual cost to the Company (based on
premium rates) of providing such coverage; provided, however, that
such amount shall be reduced to the extent comparable benefits are
actually received by Buddemeyer from a subsequent employer during the
period during which the Company is required to provide such benefits,
and Buddemeyer shall report any such benefits actually received by him
to the Company. The payments provided for in this Subparagraph (c)
shall be made not later than the thirtieth (30th) day following the
Severance Date. At the time that payments are made under this
Subparagraph (c), the Company shall provide Buddemeyer with a written
statement setting forth the manner in which such payments were
calculated and the basis for such calculations.
3. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS.
(a) Buddemeyer acknowledges that he holds currently
exercisable stock options to purchase 423,500 shares of the Company's
Common Stock which were granted to him pursuant to the Company's Stock
Option Plan and 100,000 stock appreciation rights. To the extent any
stock options or stock appreciation rights are not vested, they will
continue to vest at the same time they would have vested had
Buddemeyer remained an employee of the Company. A schedule of such
options and the exercise prices thereof are listed on Schedule A.
(b) The parties acknowledge and agree that when the
Company completes its merger with Lodgian, Inc., employees of the
Company will cause Lodgian, Inc. to issue to Buddemeyer stock options
and stock appreciation rights in equal amounts to Buddemeyer under the
same terms and conditions of the stock option plan of the Company and
the stock appreciation rights of the Company.
4. RESTRICTIVE COVENANTS.
(a) CONFIDENTIALITY. Buddemeyer agrees not to directly
or indirectly disclose to any person or entity, or cause or authorize,
directly or indirectly, any person or entity, to use any proprietary
or confidential business information of the Company, except as
required by law. This paragraph shall not apply, however, to any
information that is already in the public domain or becomes available
to the public through any act or failure to take action by Buddemeyer.
(b) NON-SOLICITATION. Buddemeyer agrees that he will
not, for a period of one (1) year following the Severance Date,
directly or indirectly, on behalf of himself
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or any other person or entity, offer employment to, or in any manner
solicit the services of Karyn Manasco, Mike Amaral or Bob Caron during
the one year period.
(c) NON-DISPARAGEMENT AND FUTURE CONDUCT. Buddemeyer
agrees that he will not knowingly engage in any activity which is
inimical, contrary or harmful to the interests of the Company and
shall not make any statements about or relating to the Company, its
officers, directors, shareholders, agents, independent contractors, or
counsel which are disparaging or likely to cause embarrassment.
(d) COOPERATION WITH THE COMPANY. In consideration for
Buddemeyer's agreement to fully cooperate with respect to any
reasonable request from the Company on an ongoing basis, the Company
shall provide to Buddemeyer the rights and benefits set forth in this
Agreement.
5. GENERAL RELEASES.
(a) Buddemeyer hereby releases, discharges and acquits
the Company and its subsidiaries, affiliates, representatives, agents,
employees, officers, directors, shareholders, counsel, assigns and
successors (collectively referred to as "Releasees"), of and from all
claims, demands, sums of money, actions, rights, causes of action,
obligations and liabilities which Buddemeyer has against the Releasees
relating to or arising out of the Employment Agreement or Buddemeyer's
employment by the Company, including, but not limited to, wrongful
discharge, breach of contract, tort, the Civil Rights Act, Age
Discrimination in Employment Act, Employee Retirement Income Security
Act or any other federal, state or local legislation or common law
relating to employment or discrimination in employment or otherwise;
provided, however, that nothing contained herein shall release the
Company from its obligation to Buddemeyer pursuant to this Agreement,
including any right he may have to corporate indemnification.
(b) The Company hereby releases, discharges, and acquits
Buddemeyer of and from all claims, demands, sums of money, actions,
rights, causes of action, obligations and liabilities which the
Company has or which the Company or any successor or assign of the
Company may have against Buddemeyer relating to, arising out of or
concerning Buddemeyer's negligent conduct, if any, in connection with
or concerning the Employment Agreement or his employment with the
Company; provided, however, that nothing herein shall release,
discharge or acquit Buddemeyer from any such claims, demands, sums of
money, actions, rights, causes of action, obligations or liabilities
relating to, arising out of or concerning Buddemeyer's conduct which
rises to a level more culpable than negligence, including, but not
limited to, intentional misconduct or gross negligence.
6. INDEMNITY OBLIGATION. The indemnity obligation of the Company
to Buddemeyer, as an officer and director of the Company, shall continue in
accordance with the terms and conditions of Article IX of the Company's
Articles of Incorporation and Article VII
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of the Company's Bylaws with respect to actions taken or allegedly taken
including, but not limited to, alleged acts, whether intentional or negligent,
and whether active, passive or vicarious in nature, on or prior to the
Severance Date notwithstanding the termination of Buddemeyer's employment to
the extent permitted by law and the Company will take no action to diminish or
reduce Buddemeyer's right to indemnification thereunder. If the Company and
Lodgian, Inc. implement their merger, the Company will cause Lodgian, Inc. to
assume Company's indemnity obligations and insurance obligations contained in
this paragraph and in the Articles of Incorporation and Bylaws referenced
herein.
7. ADVICE OF COUNSEL. Buddemeyer represents and warrants that he
has independently consulted with legal counsel and financial or other advisors
of his choice with respect to this Agreement, that he has entered into this
Agreement of his own free will, that he and such counsel have reviewed this
Agreement, and that Buddemeyer has been informed by such counsel that the terms
and provisions of this Agreement and the restrictive covenants contained herein
are reasonable, enforceable and proper in duration, scope and effect.
8. MISCELLANEOUS.
(a) Each party will bear its own costs and expenses in
connection with the preparation, negotiation and execution of this
Agreement; provided, however, that the Company will reimburse
Buddemeyer for the attorneys' fees actually and reasonably incurred by
him in connection therewith up to a maximum of $5,000.00.
(b) This Agreement contains the entire understanding and
agreement of the parties relating to the subject matter hereof and
supersedes all prior communications, commitments and understandings,
and this Severance Agreement may not be amended or modified except in
a writing signed by both parties hereto.
(c) This Agreement shall be governed by the laws of the
State of Florida without regard to the conflicts of laws principles
thereunder.
(d) This Agreement may be executed in counterparts, each
of which shall be considered an original but which shall constitute
one and the same agreement.
(e) This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors,
assigns, heirs, beneficiaries, estates, executors, personal
representatives and legatees.
(f) Any notice herein required or permitted to be given
to be effective shall be given in writing and may be personally
delivered (including delivery by private courier services) or by
telex, facsimile or telecopy, charges prepaid, to the party entitled
thereto addressed as set forth below (or to such other address as may
be specified by a party in accordance with this subsection), and shall
be deemed to be duly given or made when delivered by hand, unless such
day is not a business day in which case such delivery shall be deemed
to be made or given as of the next succeeding business day or, in the
case of telex, facsimile or telecopy, when sent, so long as it was
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received during normal business hours on a business day and otherwise
such delivery shall be deemed to be made or given as of the next
succeeding business day:
To: David Buddemeyer
4379B Willow Pond Road
West Palm Beach, FL 33417
with a copy to:
Wicker, Smith, Tutan, O'Hara, McCoy, Graham & Ford, P.A.
5th Floor Grove Plaza Building
2900 Middle Street (S.W. 28th Terrace)
Miami, FL 33133
Attention: Nicholas E. Christin, Esq.
To: Servico, Inc.
1061 Belvedere Road
West Palm Beach, FL 33406
Attention: President
with a copy to:
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, NY 10038
Attention: Dennis J. Block, Esq.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written,
COMPANY:
SERVICO, INC.
/s/ Joseph Calabro
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Acting Chairman
/s/ David Buddemeyer
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DAVID BUDDEMEYER
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SCHEDULE A
David Buddemeyer
SHARES OF UNEXERCISED
DATE OF GRANT GRANTED GRANT PRICE EXERCISED OPTIONS
------------- --------- ------------ --------- -----------
8/5/92 100,000 $ 4.00 45,000 55,000
5/14/93 50,000 4.00 0 50,000
5/26/95 5,000 9.50 0 5,000
1/12/96 13,500 10.75 0 13,500
8/27/97 300,000 16.75 0 300,000
Stock Appreciation Rights
*8/27/97 100,000 16.75 0 100,000